This ASX 200 Stock is breaking records: IDP Education share price

Summary

• Despite the prevailing uncertainty in the market, IEL shares skyrocketed on ASX. The Company’s impressive FY2020 results drove the surge in the share price.
• IDP Education reported EBIT growth of 11% and net profit after tax and amortisation of 3% as compared to the previous corresponding period.
• Despite the travel restrictions enforced by the government because of which many international students’ plans were put on hold, the demand for international education remained strong.
• In FY2021, the Company would continue to focus on accelerating its recover and capturing market opportunities.

Amid COVID-19 pandemic, where the governments of various countries implemented travel restrictions, it is online education which supported the students, primarily international, to continue their classes from distant locations. The global pandemic created havoc in the entire education system globally. Because of the social distancing protocols, there was a significant change in how education was imparted with offline or classroom sessions at schools, colleges and universities switching to the online medium of providing education.

ALSO READ: How Has COVID-19 Pandemic Altered the Education System?

In this article, we would be looking at one such ASX 200 listed stock, IDP Education Limited, whose rapid innovation enabled by investment in digital capability helped 60,000 students attended more than 660 virtual events. IELTS Indicator was launched in more than 70 nations at the peak when the restrictions were introduced. It also delivered 35,000 virtual counselling sessions. By this way, the education of the students continued.

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IDP Education has released its results today, which led to a significant boost in its share price. Before we look at the FY2020 results, let us first know a bit about the Company.

About IDP Education Limited

IDP Education Limited (ASX:IEL) is a global leader in international education services. IDP was established in 1969 and is an ASX-listed Company 50% owned by the Australian Universities. The Company has a partnership with over 700 leading Universities schools and colleges across Australia, Canada, New Zealand, the UK, Ireland, and the US.

On 20 August 2020, IDP share price zoomed up 28.485% to reach A$19.170 by the end of the trading session. The share price surge was influenced by the FY20 results released by the Company. IDP shares, in the last six months, delivered a negative return of ~36% and a positive return of 6.34% in the previous month. The Company has a market cap of A$4.15 billion and 278.34 million outstanding shares.

For the 12 months ended 30 June 2020, the Company reported EBIT of A$107.8 million, which represents a growth of 11% as compared to the previous corresponding period (+7% in constant currency terms). Net profit after tax and amortisation increased by 3% to A$70.4 million.

FY2020 Results at a Glance:

As per Andrew Barkla, IDP Chief Executive Officer and Managing Director, the Company’s results show strong momentum in the 1H FY2020, followed by a pivot towards systematic capital management plus product innovation in the 2H FY2020.

The recent investments made by the Company in digital talent and its technology platform has allowed responding to the COVID-19 restrictions with responsiveness and client centricity.

Some Important Highlights of FY2020:

• Accelerated digital strategy delivery, resulting in industry-leading virtual counselling along with event platform.
• Rolled out IELTS Indicator, which is an online IELTS test to assist students to progress applications where in-centre testing was halted.
• There was an increase in the student placement volumes by 3% to 51,000. The growth in the placement volume was driven by a 28% rise in multi-destination volumes.
• It obtained firm B2B client orders. It reflects the industry’s demand for data-driven insights.
• It was able to strengthen its balance sheet via A$254 million equity raise plus A$175 million working capital facility.
• IEL followed disciplined cost control measures that delivered A$35 million in overhead savings in 2H FY2020 compared with 1H FY2020.
• The net cash by the end FY2020 was A$307 million.

Mr Barkla also stated that despite the travel restriction imposed by the government as a result of which many international students’ plans were on hold, the Company noted that the demand for international education remained strong.

As per the research conducted by IDP Education, it was found that 74% of the students with current university offers are holding on to their study goals. Likewise, IDP’s English Language Testing stream is also regaining momentum post the near-global shutdown of the network due to social distancing reasons.

Although the IELTS volumes were impacted in 2H FY2020, still the Company noted that its testing centre network safely reopened in 53 of the 55 countries where IDP Education operates.

At present, IDP’s board decided not to declare a full-year dividend. Also, the Company which deferred its interim dividend in March 2020 has agreed to pay it on 24 September 2020.

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Outlook:

Looking to FY2021, Mr Barkla stated that the Company would continue to focus on accelerating its rebound and capturing market opportunities. IDP’s global dataset and insights were much in demand during FY2020. IDP Education has plans to continue sharing its insights to support the sector as well as ensure the interests & behaviours of students stay at the face of each decision making.